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HONG KONG (AP) — Most Asian stock markets fell Friday as investors turned cautious following new U.S. sanctions targeting North Korea and a China credit rating downgrade.

KEEPING SCORE: Japan’s benchmark Nikkei 225 slipped 0.4 percent to 20,273.26 and South Korea’s Kospi lost 0.7 percent to 2,389.83. Hong Kong’s Hang Seng shed 0.8 percent to 27,877.19 and the Shanghai Composite fell 0.5 percent to 3,341.72. Australia’s S&P/ASX 200 edged up 0.4 percent to 5,675.70. Taiwan’s benchmark fell and Southeast Asian indexes were mostly lower.

SANCTIONS: Geopolitical tensions ratcheted up after U.S. President Donald Trump authorized stiffer new sanctions in response to North Korea’s nuclear weapons advances, drawing a furious response from Pyongyang. Trump’s administration said it would punish foreign companies dealing with the North, including by expanding the Treasury Department’s ability to ban anyone from interacting with the U.S. financial system. North Korean leader Kim Jong Un retaliated by calling Trump “deranged” and saying he’ll “pay dearly” for his threats, while Kim’s foreign minister reportedly said the country might plan to test a hydrogen bomb in the Pacific Ocean.

CHINA RATING: Markets in Asia were getting their first chance to react to Standard & Poor’s announcement late Thursday that it was downgrading China’s credit rating, citing rising debt levels. S&P lowered its sovereign rating by one notch, to A+ from AA-, saying credit growth increased China’s economic and financial risks. Then it cut Hong Kong’s rating Friday, citing risks posed by close ties between mainland China and the Asian financial center. The downgrade underscores challenges faced by China’s Communist leaders as they cope with slowing growth in the world’s No. 2 economy.

MARKET VIEW: “S&P’s decision to cut China’s credit rating yesterday looks like a case of bad timing, as China has already begun the long and difficult process of tackling reforms and leverage,” said Rob Carnell, head of Asia research at ING. He and other analysts noted the downgrade came ahead of next month’s twice-a-decade Communist Party congress. Beijing wants markets to remain stable for the meeting, where top leaders will be reshuffled and policy plans get laid out.

WALL STREET: Major U.S. benchmarks ended lower. The Standard & Poor’s 500 index lost 0.3 percent to 2,500.60. The Dow Jones industrials fell 0.2 percent to 22,359.23. The Nasdaq composite lost 0.5 percent to 6,422.69.

ENERGY: Oil futures were mixed. Benchmark U.S. crude added 8 cents to $50.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 14 cents, or 0.3 percent, to settle at $50.55 a barrel on Thursday. Brent crude, used to price international oils, fell 3 cents to $56.06 a barrel in London.

CURRENCIES: The dollar weakened to 111.78 yen from 112.49 yen in late trading Thursday. The euro climbed to $1.1955 from $1.1940.